Nvidia stock gets a rare Wall Street analyst downgrade

Investing.com -- Phillip Securities analysts cut their rating on Nvidia (NASDAQ:NVDA ) stock from Buy to Accumulate, citing recent price action. Alongside the downgrade, the firm slightly lifted its Nvidia target price to $160 from $155.

“We downgrade [from] BUY to ACCUMULATE due to recent price movements, with a higher target price of US$160,” analyst Yik Ban Chong noted.

The analyst said Nvidia's third-quarter earnings for fiscal year 2025 met their expectations, with revenue surpassing Nvidia's own guidance by 8%, and profit after tax and minority interests (PATMI) increasing by 109% year-over-year.

The note highlights that approximately half of Nvidia's data center sales are attributed to hyperscalers, with the rest stemming from enterprises and sovereign nations. Nvidia is set to begin production of its Blackwell products in the fourth quarter of 2025, anticipating revenues from Blackwell to surpass the initial estimate of "several billion dollars."

The chipmaker has forecasted that the initial ramp-up of Blackwell will result in a moderate to low-70s gross margin percentage, with expectations for it to reach mid-70s when fully ramped.

Despite the downgrade, Phillip Securities maintains its fiscal year 2025 revenue and PATMI projections for Nvidia.

Moreover, it has increased its revenue and PATMI estimates for fiscal year 2026 by 5% and 7%, respectively, “to reflect the stronger ramp-up of its data accelerator platforms (Hopper + Blackwell) and lower anticipated corporate tax rates.”

The report also reveals adjustments to margin assumptions for the fiscal year 2026, aligning with management's guidance of lower margins due to the introduction of Blackwell products. Phillip Securities' weighted average cost of capital (WACC) and growth rate (g) assumptions remain unchanged.

Nvidia stock closed 0.5% higher on Thursday, the day after it delivered another solid quarterly print. The company's guidance underwhelmed lofty investor expectations, but analysts remain largely unconcerned as the focus shifts to ramping up Blackwell heading into 2025.

Source: Investing.com